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News in Brief

Labour Market Enforcement Strategy published

The Director of Labour Market Enforcement, David Metcalf, has published his first report detailing the scale of employer non-compliance with National Minimum Wage (NMW) and non-payment of holiday pay. It also sets out his proposals to tackle abuse.

The key findings are that:

342,000 jobs were paid below the NMW in 2017

The total unpaid wages amounted to £3.1 billion in 2016 (over half of which is believed to relate to unpaid holiday pay)

£4.5 billion is “misappropriated” from agency workers annually (over half of which is believed to relate to holiday pay)

More should be done to make sure that workers are aware of their rights and understand how to enforce them.

The report recommends increasing the size of civil penalties for breaching NMW, increasing the numbers of employers named and shamed on the public registers (although these should concentrate on those who commit serious violations rather than organisations that simply make mistakes) and increasing the number of prosecutions for non-compliance, as there have only been 14 NMW prosecutions since 1999.

The report has been presented to Parliament but is unlikely to be debated unless it is taken up by the BEIS Committee or by the Labour front bench.

From 6 April 2019 all workers must receive a pay statement

Following recommendations made by Matthew Taylor in his review (published last year) the government has confirmed that the right to receive an itemised pay statement will be extended to all workers. Currently, only employees have this right.

This measure is designed to help workers ascertain whether they have received the correct amount of pay. Many casual staff are paid an hourly rate and next year employers will have to state how many hours the worker has worked and clearly set out what deductions have been made.

EU proposes new law to strengthen whistle blower protection

A proposal from the European Commission will guarantee a high level of protection for whistle blowers who report breaches of EU law by setting new, EU-wide standards. The new law will establish safe channels for reporting both within an organisation and to public authorities, and will protect whistle blowers against dismissal, demotion and other forms of retaliation.

All companies with more than 50 employees or with an annual turnover of over €10 million will have to set up an internal procedure to handle whistle blowers' reports.

The draft law will be revised by EU governments and the European parliament, a process that usually takes 18-24 months. Although the law will only come into force until after the UK leaves the EU, the British government may find it forms part of core EU standards that must be respected to secure a far-reaching trade deal.

Review suggests the Apprenticeship Levy has diminished the quality of apprenticeships

From April 2017 employers with a payroll of over £3 million have been required to pay 0.5% of their payroll costs to HMRC to fund the Apprenticeship Levy. One year on, the Think Tank Reform concludes that it has “diminished the quality of apprenticeships” with many businesses relabeling low-skilled jobs as apprenticeships while gaining subsidies for training.

The report found that almost 40% of the new apprenticeships designed by employers are apprenticeships, “in name only,” as the list of roles that now are classed as an apprenticeship do not meet the “historical or international definition of an apprenticeship.”

It has made a number of recommendations including:

Abandoning the target of three million apprenticeships by 2020, so as to focus on apprenticeship quality instead

Introducing a new internationally-benchmarked definition of an apprenticeship

Removing the requirement for 10% employment co-investment towards the cost of training apprentices, to avoid employers disengaging from apprenticeships

Replacing the existing HMRC digital payment system with a simpler ‘apprenticeship voucher’ model

Making Ofqual the only option for quality assuring at the end-point assessments for apprentices to ensure standards are maintained over time.

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